>> are they going to subtract the fee? if you cancel, you pay a fee. i was a little taken back by this, don't understand why the airline doesn't let you buy a ticket and it is yours. melissa: security purposes no, you cannot really be bartering and trading. it used to be, we have really fallen a reat distance, you watch "mad men." i got a bag of peanuts. melissa: we will see you tomorrow, "the willis report" is next. >> we begin with breaking news, house to vote on to fiscal cliff

mess, but only one amendment republicans are hoping will pass. here with exquisite exclusive details, richardson in washington. >> good evening. what republicans are looking to do in the house is basically deal with the tax provisions of the fiscal cliff to hit on january 1 so there will be two amendment votes on the house. the first constructed by republicans dubbed the nancy pelosi plan because it contains a number of the provisions she holds. amounts less than $250,000 per year, it extends some of the stimulus provisions with income taxpayers, child credit, and raising amounts more than $1 million. this is a republican plan ,-com,-com ma the one if it goes past the house, likely to pass the house, it makes the current rates permanent for amounts less than $1 million per year. it takes capital gains and dividend rates now 15%, make

them permanent for amounts under $1 million for amounts more than $1 million it is 20% dividend rate operates. there is a permanent estate tax of 35% for amounts of more than $5 billion bid the sequester, automatic spending cuts set to hit starting on january 2 or 1st, essentially an automatic cuts to payments for doctors who treat medicare payments come excited on implement benefits, all these other elements of the fiscal cliff aren't helped with, that is why house speaker john boehner is still negotiating a larger house deal with the white house and republicrepublic ans are discouraged by what the president offered them last night, they have this backup plan on the table and these are the items they will vote on in the house on thursday. if anything is going to pass the house is republican plan and

then the senate where the senate democrats say it has no chance. gerri: here we go again, thank you for that. so are we further apart than we were 24 hours ago? and if the president now telling fox who took a step back today, the last 24 hours feel a little uglier. we will be joined in a moment, but first, art lafferr former advisor to president reagan. welcome back to the show. you look at this plan on the table from republicans right now and they are calling for higher taxes, what do you make of that? >> they shouldn't be calling for higher taxes, but something has to be done and all those taxes will go up if we let it go over january 1. i would like to see some tax cuts extended, and that would be great. i would like to see them all extended, but that's probably won't happen. i think they're moving in the right direction, it is the right

thing to do politically as well. gerri: mark this in the books of history. i have never heard you say that, personally. i-pronoui-pronou n was comparing the two plans side-by-side, what republicans have put out and the white house had put out, let me tell you, these two plans are different, but not in their affect on the overall debt. 10 years from now, either plan goes into effect, $21 trillion in federal debt. >> it is a real burden on future generations and it makes it very difficult to get a political economy of growth going in 2014 or 2016 when politics will change. that is the way it has been going for long time now, and it has got to stop but obviously today is not the day it is going to stop. gerri: talking but all the other

taxes a part of this, so much at stake, are you confident some kind of agreement will be reached? >> i think some will be reached, yes. republicans in the house are not very agile. it is hard to control 235 members, they all have different views and the president has a huge advantage in game planning but once this is over the president will own the economy next year and next is economy will look retty bad and in your great damage to the democratic party in 2013. i am hopeful in the long run but will be better this year than next year. gerri: you said it is okay by you to raise taxes on the million dollars plus. are they taking a responsible stand here? some republicans in the house even now saying this isn't a tax cut, leadership framing it as a tax cut, it isn't a tax cut, it is a tax hike for many people.

do you think americans will get the real deal on this, so many people feeling they are misled by both sides of the aisle. >> the point is if we go to january 1, all taxes rise and the question is if you pass a bill now, to exclude some of the taxes that are going to rise, at least get some of them that won't rise, that is the way i look at it. the president does have controlled the white house, control of the senate and control of the negotiating situation because all those tax cuts go up. he is doing the best he can. gerri: he wanted to protect this may taxpayers as he could. let me take you back a couple of years. president ronald reagan saying we can't spend ourselves rich. i want you to weigh in on this, there seems to be no serious discussion of where to curb

spending. what to do with entitlements, that is spending out of control. as you know, this is the majority of the budget. >> what are you going to do in the president doesn't want to do it in the senate doesn't want to do it either? they don't have control of the political economy today and they can use the debt ceiling, and i really hope they do, bring spending cuts in place, but this is not the way we can really make a major overhaul of the economy. you have to wait and see, and then 86 tax act which rocket shaped the economy straight up, mostly democrats voted back then as well. all but three voted with us, so that is amazing. gerri: there are a lot of strange alliances being built here bid a lot of people saying one thing and doing another. the democrats at one point had

back a plan not too long ago about tax increases on people earning a million dollars or more. it has not been that long ago talking about a three for one deal, $3 in spending for increased $1 in taxes. now it is one-for-1. has boehner gone too far? >> he is under a lot of pressure on that, but the question i'm sure he knows his vote as well, john boehner trying to save as much as he can to keep the economy from collapsing. i think it's a great job. i wish he didn't have to go this far and i wish we could've got the extension of all the tax cuts but i don't think that is possible. i admire him for doing that, although i wish we could've gotten more of the tax cut through. gerri: he said this morning real discussion of tax reform and entitlements will have to take

place next year, but at that point what kind of leverage will the republican party have to make that happen? >> it is not going to happen in this next two years, there is no real reform that will happen. you may get a piece here or there but you get a real fundamental change with a-determia-determi ner low rate flat tax spending restraint, free trade: minimal relation, that will not happen until the politics of this country changes, change the senate and the white house to be will to get that kind of real change, that will take several years before it takes place. gerri: we have to wait longer. it is always a pleasure to have you on the show added to hear the show attitude here would have to say with so much experience with this topic. thank you so so much. >> thank you. gerri: coming up after the break, we will talk about how the day has unfolded, plus how small businesses getting ready

for the fiscal cliff and how that will impact you. and the big factor everybody missing over federal spending is the automatic spending increases. you will not believe how congress is spending your money. i will break it down.

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gerri: negotiating on the fiscal cliff today, the house that to vote on two amendments and then it is up to the senate to pick up the ball. senator, welcome back to the show, always nice to have you here. >> thank you very much. gerri: we just spoke with art laffer, i was surprised to hear him say he sees room for compromise and he was okay, as he put it, with what republicans were putting out, higher taxes for people earning a million dollars or more. and then listen to this. >> i can't imagine i would not

be supportive of a proposal that had permanent tax reductions for substantial portion of the american taxpaying public. my own view would be to not raise taxes on anyone but we will do with the package from the house, majority obviously will have a chance to change it. gerri: is there compromise in the air, are we close to a deal? >> there is more compromised than we're hearing from both sides posturing as people do in negotiations, but i see a coming together. i think john boehner has been very bold, put something on the table that includes tax cuts on the vast majority of people in exchange for real spending cuts. i thing the president has come to the table with a central if we're going to get social

security in a situation where it can last for 75 years. $200,000 is two college professors. we had to get away from that from being middle class. gerri: i think somebody is listening to in the the new york delegation. that is difficult to raise a family of four. let me get to you some of the issues bubbling up today. senate republicans baby feeling like they are a little left out of the conversation. you have been really outspoken. you will be leaving, do you feel like you have got to get this done at this point? >> i do think we have to come to some accommodation. i think it has to be balanced, it has to have spending cuts, we have to see a way forward to get

the debt down. we are on a fiscal cliff. yes, we have to do something. we need some losses, that is the way negotiations go and we don't have a great hand to play. the president doesn't have a full hand to play we have to have some given some take. gerri: you keep describing them as tax cuts, that is not how most experience it, they will have no changes how they will experience it so i'm not sure the american people will see this as a great tax cutting gift at christmas. >> it is the bush-era tax cuts which cause caused the economy to pick up, it increased it in a way that we all wanted to. creating jobs in the vibrant economy.

now we're in a doldrums and it is continuincontinuin g the bush tax cuts exactly what we need right now. gerri: anything to be concerned about in terms of the details? the issue is not just the fiscal cliff but also the alternative minimum tax. there is the estate tax. >> the alternative minimum tax is very important because it will kick in in the lower 30,000. and we have got to fix that. estate tax, affecting small business and farmers, i think we need to keep that at the level it is now. 35%, 5 million exception. there are a lot of democrats that agree with republicans oo that because they come from farm

states and no with a burden that can be. i feel fairly optimistic. gerri: we don't have a lot of time left. you project we will have some3 sort of deal before december 31? >> i do. i think it may be dragged out until the end, but i think there will be a deal. not something everybody likes or maybe anybody likes. but at least if we can avoid the fiscal cliff and we see some sign that we will get this debt down and we can govern in a responsible way, that is what the market is looking for and american people and families are looking for. gerri: thank you for coming on, hope you come back soon. meanwhile there are growing concerns tonight among many small business owners ahead of the fiscal cliff, many of whom are looking to sell their businesses to avoid higher taxes come january 1.

joining me now, thank you for coming on tonight, appreciate it. you and i talked by phone not too long ago and i asked you what is the reaction among people who have a small business and they know they will sell it at some point, what have they done this year? >> it is kind of schizophrenic. a group that is scared of the uncertainty, they held back and they waited too long, they didn't prep their business up and some liked the gold rush at the end of the year, it is a stampede to the end of the year. i bet you every firm that does due diligence is going upwards. we will not be able to get it done by the end of the year. >>gerri: are there deals you wat done that you don't have enough hours in the day? >> exactly..3

that is just one deal, but we have multiple deals going on, many people have given up at this point and are now not taking defensive strategies restructuring the deals so they can avoid or otherwise defers some of the tax. gerri: what is her biggest fear of going over the fiscal cliff? what is the issue for them? >> a lot of people have decided to hold onto their business and they realize in order to compensate for the increase in taxes both capital gains and income tax, the social security tax increase, and the obamacare tax 3.8% they will fit, they feel the need to hold onto the businesses and i did some calculations and went on to

cfo.com and said they would have increase their bottom line 24%. it would take three or four years and a lot of capital to get even with the net proceeds from the business in 2012 so they would have increase the bottom line 24% to make up the tax hike. gerri: i get a sense even if they did not have plans to do that, they're still very anxious because of the issues you are mentioning. the rise in income taxes, it is hard for those folks to fight that kind of plate, what are you telling them? >> it is more specific and more than that, a lot of people are planning to get under the 49 maximum employees before obamacare compulsory insurance kicks in. we will be cutting down and going with part-time, they're

taking defensive strategies right now. there'll be cutting back on capital expenditures because of the write-offs that will be decreasing very rapidly and that will decrease capital investment. i could go through 100 things. gerri: the beat goes on. incredible what we have seen with the changes in the tax law, you're very knowledgeable. i hope you come back sometimes doing and tell us what happened after the first of the year for these people. thank you so much. >> thanks a lot. gerri: coming up the not the real danger to our economy is in the automatic spending cuts or tax increases on the fiscal cliff, it is the automatic spending in the budget. i will explain. and the newest republican senator center promising to shake things up in washington. stay with us.

gerri: when it comes to the fiscal cliff, getting, call out there. of letters pretty soon. the problem is capitol hill has grown so accustomed to expanding government spending even the republicans hardly know how to cut the flow of tax dollars. how bad is it? since 1974, nearly 40 years the baseline the federal budget automatically increases every year.

that is before anybody even cast a vote. that makes it easier for politicians to look like they're cutting spending when in fact they are simply cutting the growth of spending. it is all gimmicks. of course we have had budget submitted in four years. washington has made even worse by the federal bureaucracy, every single day congress misses a deadline to pass budget that takes a financial toll on taxpayers. just four times in the past 37 years, nearly two decades, congress passed a budget bill before the start of a new fiscal year. as a result as you might expect everybody makes changes, federal contractors guard against budget uncertainties. expensive month-to-month contract instead of annual ones which would be cheaper. bureaucrats make hasty or unnecessary hires because of the uncertainty. a university of maryland

professor who studied the bureaucratic nightmare. the solution for all of this mess is more gimmicks according to washington. the two plan/table do precioos little to solve the big problems like the $16 trillion debt. obama's plan, 1.2 trillion in revenue increases, 1.22 trillion in spending reductions, total, $2.42 trillion savings overall. onto boehner's plan. boehner's plan is $1.263 trillion in new tax revenue, $1.4 trillion in spending cuts. a total of 2.663 altogether, total savings. these numbers put together by our brain room. the two planets line up like this, are we having a problem

with graphics or what. here it is. look at these numbers, over 10 years 4.6 trillion, boehner plan about the same, there is not that much difference here. given the fact we will add almost $10 trillion in deficits over the next 10 years whether either of the plans are enacted we will still have $21 trillion in debt by 2022. i thought maybe i would see the soldiers again. which makes me think thanks washington for nothing. they would do little to save the financial mess. gimmicks, all gimmicks. coming up, picking tea party favorite for the senate seat. reaction on what it means for the future of the g.o.p. copd makes it hard to breathe,

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gerri: liberals love to say the g.o.p. is the all white male party, but senate republican will be the only african american in the u.s. senate. the but, spent from south carolina elected to succeed jim demint. here to weigh in from the weekly standard. what do you make of this? it is fascinating to me that the only black senator would be a very conservative tea party candidate. >> the irony given all of the hammer and we have seen at the 2012 election about the lack of diversity amongst republicans and what have you is if you look across the republican party and people likely to be leaders in the politics 10, 15 years from

now, many republicans of a variety of ethnic and racial backgrounds were most likely to be the leaders whether it is tim scott or marco rubio, brian sandoval, these are people who are widely looked at bipartisan fashion. with that as for the coleaders in america. they're all republicans. gerri: it is really fascinating. this to say about the selection. >> while i get this minority female, that is what everybody wants to talk about, i want to remind everybody he earned this for the person he is, he earned proven and he will continue to earn it for the leadershileadershi p that he showed. gerri: what do you think of the

street credit? speak of the fact he is an articulate and forceful proponent of small government conservatism and an avatar of the tea party movement itself secondarily is he brings bring some level of diversity. the look of the kind of things about tim scott entered congress, who are the people who really have been looking at, the most likely leaders to emerge from this class? well the first people named from the very beginning. the way he makes the argument. gerri: his background is fascinating. he was not successful right away. what about that? >> this is a guy who grew up in

politics, just a contrast there is notable in and of itself. immediately one of the most confidants of the leadership despite the fact coming from the tea party. this is somebody who came out of the tea party movement and was immediately trusted by the establishment republicans because of who he is and the integrity he brought to the job. gerri: build his own business from scratch, just a really impressive track recordd >> not somebody who came up in a typical way. gerri: do you think we will see him hold onto that and elevated even further maybe into the party leadership?

>> unless they make some major air doubly expected to make, somebody will be on the national scene for a long time. conservatives in south carolina getting reelected as long as they want to be reelected as long as they continue to articulate the kind of views he has articulated so far in his short career. gerri: thank you for coming on, have a great holiday if i don't see you. we're switching gears up a little bit. yesterday, hope you remember this, the top five gifts women don't want for christmas. before we get to the top five, the gifts men don't want, we want to know. logon to gerriwillis.com, i will

show the results at the end of the show. all right, ladies, with the help of our friends ,-com,-com ma here are the top five gifts not to give your man. coming in at number five, ties. it is considered touring and forgettable, but i kind of like them. does nothing to be excited about, they say. he doesn't want it, whatever. number four, colombia did telling him how to smell is not very nice, i guess. number three, selling gadgets. he cannot throw anything as seen on tv in that category. i get that, nose trimmer. and finally the number one item, a gym membership. like women don't want diet

products, your man does not want to be told he should lose weight. the worst part, he may retaliate and give you the same gift next year, you don't want that. more and more students applying early to college, we will tell you what to do if you are denied. and under holiday shopping yet? the top five gifts men don't want this christmas. we will be back.

gerri: if you're college-bound looking for a spot in the class of 2017 you better check your mailbox this week.

early admission messages have gone out. here with information on how to handle early admission letter, rejection, deferral, founder and ceo. so, why are so my kids applying so early, what is going on? >> to understand the regular admission is filled with students from the u.s. and abroad, much more competitive so if they can get their stuff in early, they have done the research i finished their testing they will apply early because the chances of getting in a slightly higher in the early rounds. gerri: or numbers show more and more kids are trying to do this, give us an idea of the trend. >> we have not tracked the number of students who applied early. it is accepted by 480 at colleges nationwide.

you have supplements to fill out, but what we have actually contacted individual colleges and what we have seen is huge numbers in the early rounds, so 40%, university of virginia and chicago are up 19% each, northwestern, miami university in ohio reporting record numbers. gerri: is that why they're seen such big increases because these are really great schools. >> both public and private schools are seeing an increasee we are seeing more kids are being deferred as well because they're trying to figure out their classes for this kind of a predictor of what is going to happen. gerri: if you applied early and are denied, what should you do?

>> writes them a letter, let them know what you've done in and out of the classroom since two applied and new test scores and have a senior year teacher write another letter of recommendation on your behalf. gerri: so keep plugging away. if you are denied, what should you do? >> hopefully you have done your research right you will have a list of at least 10 other schools that are a good fit school reaching the targets and your work in those applications now before the decision deadline. gerri: you may think now i can coast for the rest of the semester, but you say no way. >> we don't want to get senioritis, you have to work hard the rest of the year and be careful about writing in school or on facebook. a lot of kids who did not get in early and they are dealing with their own emotions on the process. gerri: what are the standards?

>> a lot of schools will try to cap at 30% of the incoming freshman class but we have seen schools admit as much as 40% or even higher than that of the incoming freshman class in the early round, which is why it is so competitive. gerri: thank you for coming on, appreciate your time. up next one of the top financial advisors joining us with the fiscal uncertainty. questions you should ask your advisor right now. great news to report, how santa claus is coming early this year for drivers. stay with us.

gerri: the stock market rallied today on hopes the fiscal cliff deal may be near. up at the close. many experts warn we will fall back into recession if the fiscal cliff hits, but my next guest says maybe not. your portfolio could be scared. chairman and ceo, i thought this was really interesting because it is very contrary to what a lot of people might think and i want to run through some full

screens to show people what you are talking about specifically. he looked at some recessions in the past, so let's start with the first full-screen. 100,000 invested in the 1981-82 recession would've earned one heard 80,644. the total of your portfolio at the end of the recession. likewise moving forward to the next recession, if you started with 100,000 come he would've ended up with more than 114,000, i think you're getting the picture here. and one more, during the 2001-2003 recession that ended up with 126,000 if he you started with $100,000, completely contrary to what most people expect, they think the stock market goes along with the economy. what you say? >> that is a myth. the stock market and economy are to two different things.

high unemployment, and yet stock market is more than doubled, suite have to recognize the economy and the stock market are two different things and investors do not necessarily have to fear a recession. not that we shouldn't be unhappy about it or try to avoid it but don't think it is armageddon if it occurs. gerri: people are worried about the fiscal cliff and don't know what to do, trying to figure out how to even taught my financial advisor about this. how much concentration in my portfolio, what do you mean by that? >> we have to make sure we don't have too much of our money in a bad place. how much of your money are in stocks as opposed to bonds or real estate or gold or foreign utilities, diversification is the best way to protect yourself in this economic uncertainty. gerri: what is the risk here?

>> as interest rates begin to rise, and eventually they will, bonds will fall in value, suite have to make sure you don't own long-term bonds. it should have maturity dates of five to seven years or less, three years would be great. if interest rates rise come he won't lose a lot of money due to rising rates. gerri: use a short enough, like no loads of bonds, that is really fascinating. also talk about credit risk, how much credit risk with the bond holdings. >> we have to worry about bond issuers falling in their own value, miscible bonds issueddby state and county. many corporations issuing bonds are also on shaky financial footing. we need to ensure the company company or the government that issued my bond will be able to pay off, if they get a credit

card from aaa to single-a, the value of the bond could get cut as well. gerri: so i have to look at the bond ratings? and what is a safe rating? >> i would recommend you go only with investment grade aaa to single-a would be the safest approach with bonds. gerri: i think this is a good one, how much turnover is occurring annually in my portfolio. is lower always better? >> yes ,-com,-com ma lower is better, lower in cost, lower in risk. people will buy a stock and if it does not perform in the next couple of weeks or a couple of months they dump it. that high high-level turnover only creates volatility, higher expenses and higher risk. you want to make sure investments you hold are genuinely being held for the long-term, for four years, and if you find the investment advisers constantly making making changes in his advice or the mutual funds you own are

constantly flipping from your doing with doing with a high-cost cost, high volatile investment that is instituted for long-term goals. gerri: do i have to make all of these changes before the end of the year? >> unity conversation now seeking properly position your portfolio for what might come on january 2 in the new year with the new tax laws, the new economic environment so it is definitely worthwhile having this conversation with your advisor right now. gerri: i love the advice, always great to see you. we will be back with my two cents more and the answers to the question of the day. have you ever rejected? [ male announcer ] at scottrade,

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>> i asked have you ever regifted something? here's stories you shared on facebook. billy says a friend of my gave me a beer i didn't like as a house warming gift, and i regifted it to him for christmas. month thew says my sister got a used curling iron that was filthy. that's gross. finally, frank says, i rewrapped a bad holiday fruitcake giving it to my rude and noisy next door neighbor. that's common. i like it. that's what i say. 47% said yes, and 53 # -- 53% said no. really? are you telling the truth? i don't know. finally tonight, santa close cams early for drivers. car prices and insurance rates going up, but at l